By Peter Barker
LONDON, Dec. 29 (Xinhua) -- Unemployment in Great Britain is likely to continue rising and to peak in the summer of 2010 at 2.8million, the Chartered Institute of Personnel Development (CIPD) said on Tuesday.
In its Annual Barometer Forecast, the CIPD said another 250,000jobs would be lost before unemployment peaks next summer.
However, the CIPD, which represents many of the country's human resources professionals, warned that higher-than-inflation pay deals could see unemployment top the psychologically important three-million barrier.
John Philpott, chief economic adviser to the CIPD, said the 2010 forecast assumes the economy recovers in line with current market expectations and that the rate of growth in average earnings picks up to no more than 2 percent.
Philpott said: "Given the likelihood of a rise in price inflation to at least 3 percent in 2010, our forecast implies a squeeze on real pay next year. This could be difficult to deliver following a recession during which many private sector employees have experienced pay freezes or pay cuts. A slower than expected recovery or stronger earnings growth would threaten to raise peak unemployment to at least 3 million."
Value Added Tax will return to its 2008 level of 17.5 percent on January 1 from its current 15 percent, a level it was cut to by the government to bolster the economy. This will push up inflation,
Although 2009 saw fewer than expected job losses, the CIPD warned that even though the recession is likely to end formally in the fourth quarter of 2009, the jobs pain could continue into 2010.
Earlier this year, the CIPD had said it expected unemployment to peak at 3.2 million as a result of the recession.
The total number of unemployed in Great Britain currently stands at 2.49 million, or 7.9 percent of the population, according to figures from the government's statistical arm the Office of National Statistics.
Many employers have been hoarding staff, avoiding laying people off and hoping that the situation will improve. If this no longer looks possible, employers will make people redundant.
Philpott warned that the CIPD forecast assumed that tax and public spending measures announced in chancellor of the exchequer Alistair Darling's Pre-Budget Report (PBR) on December 9 had no negative impact on the labour market in 2010.
In his PBR, Darling announced that National Insurance (NI), which pays for the National Health Service and is paid by both employer and employee, would increase by 1 percent from April, 2011.
"If employers were to anticipate the rise in NI contributions when making staffing decisions and/or there was a more immediate cut in public spending -- which could be the case if the Conservatives gain power at the general election due in the first half of 2010 -- unemployment might peak at a higher rate than we currently forecast."
Looking to the longer term, the CIPD report described the economic prospects as a jobs-light/pay tight recovery.
The benign employment relations of the long 2000s boom may have just about survived the worst ravages of the recession but they face a severe test in the coming decade, said Philpott.
He added: "Private sector employers will seek to contain wage costs and public sector employers will have to cope with the consequences of fast shrinking budgets and mass job downsizing."
Whoever wins the next general election will have to cut budgets with the effect of losing public sector jobs. The Conservative Party has always had an agenda of criticizing the public sector, and would be more likely to introduce bigger cuts.
The next general election must be held before the end of May, 2010 and at the moment the opposition Conservative Party looks favorite to win.
According to a ComRes poll for the Independent newspaper on December 20 the Conservatives have a nine-point lead over the governing Labour Party. A Yougov poll for the Daily Telegraph on December 21 showed a 12-point lead for the Conservatives.
